Can the nursing home take my father's life insurance?

Your question indicates that you are relying on the nursing home (or an application service that they hire) to prepare the Medicaid application. This may be a good approach for people who do not have any assets, and who don't have a spouse at home who is relying on the nursing home resident's income .

But many people are best served by hiring an elder law attorney in your state who can explain the entire eligibility picture, and how it applies to you and your father.

If your father has limited assets, there is no reason why he should not immediately qualify for Medicaid. The only requirement is that his assets be organized properly, to comply with the Medicaid regulations.

A life insurance policy worth $10,000 would disqualify him, but the excess value of the policy can be used to buy non-countable assets (like an irrevocable funeral contract). It's also possible to set aside any excess assets in a pooled trust arrangement for your father or transfer the assets to people who are exempt from Medicaid transfer penalties.

You won't know until you talk with the professional who can give you the big picture.

The problem with the free services provided by the nursing home is the volume of work that they must contend with. Often they can't give immediate attention to the many details that could help you. Timing matters when you need eligibility to begin now.

You'd better sit down with some headache pills, a good strong cup of coffee and a fine-toothed comb and go through the NH's terms and conditions. You're looking for what liability a Medicaid resident has for meeting any shortfall in fees and therefore any outstanding debt; I personally wouldn't have thought, once the Medicaid funding is in place, that he'd have any - but this isn't my area and others will know better.

I'd guess that the question about life insurance has more to do with families' losing interest in settling their parents' bills after their parents have passed away: i.e. self-funding residents. But I repeat, only a guess.

If it's a term policy, then it is not counted as an asset and they couldn't come after the death benefit assuming the estate is not the beneficiary. If it's a whole life policy, or other policy that has a cash surrender value, then the cash surrender value may be considered an asset. In that case, you may be able to somehow designate the death benefit to pay for funeral costs.

Also states have limits on the assets a person can have on Medicaid. Check with nursing home and make sure life insurance meets Medicaid guidelines or parent may have to cash in and pay for care or prepaid funeral.